Non-deposit-taking Saccos to start paying regulatory levy

Kenya Union of Savings and Credit Co-operatives Limited's CEO George Ototo shares a word with Sasra CEO Peter Njuguna during the 3rd day of the KUSCCO's 7th Annual Sacco Leaders Convention. [Kelvin Karani, Standard]

Non-deposit-taking Saccos will beginning this month pay an annual regulatory fee as they fully come under the purview of the industry regulator - the Saccos Societies Regulatory Authority (Sasra).

The Annual Sacco Societies Levy has been put at 0.1 per cent of the total non-withdrawable deposits held by a Sacco as per its audited accounts for the preceding year.

According to a November Legal Notice by Saccos Sasra, the levy will increase to 0.13 per cent in 2025, 0.14 per cent in 2026 and 0.15 per cent in 2027 and stay at that level until further review in the future.

Sasra started regulating the non-withdrawable deposit-taking Saccos with deposits of at least Sh100 million in 2021, expanding the regulator's mandate, which is in addition to its oversight of the deposit-taking Saccos.

The rate that the non-deposit-taking Saccos will be paying is lower compared to the 0.175 per cent levy that the larger deposit-taking Saccos pay. Sasra has been regulating the deposit-taking Saccos since 2010.

"The purpose of the Levy Order, 2023 is to impose the Sacco Societies Levy payable by Sacco Societies, specified under the Regulations as undertaking non-deposit taking business in accordance with section 15(1) of the Act, which provides inter alia that '[the] Authority may by order published in the Gazette, impose a levy to be known as the Sacco societies levy'," said Sasra.

"The Levy Order, 2023 therefore operationalises the provisions of Section 15(1) of the Act with regard to the Sacco Societies Levy payable by Sacco Societies specified as undertaking the non-deposit-taking business."

"The rate of the levy is 0.1 per cent and is projected for assessment and payment within the year 2023 upon conclusion of the requisite legislative processes."

The non-deposit-taking Saccos came under the regulatory Sasra's regulatory oversight in 2021 following the expansion of Sasra's mandate to include oversight of this cadre of Saccos that have previously been regulated by the Ministry of Cooperatives.

This came after the publication of the Sacco Societies (Non-deposit-taking Business) Regulations, 2020 that took effect on January 1, 2021.

Sasra said 183 non-deposit-taking Saccos came under its regulatory oversight as of September 30, 2023.

"The rate of the levy was arrived at following engagements with key stakeholders, in particular, the Saccos themselves as well as National Co-operative Organisations, the Ministry of Cooperatives and Micro Small and Medium Enterprises and peer financial regulatory institutions," said Sasra.

"Implementation of the regulatory regime is aimed at improving the overall sectoral stability through prudential and market conduct supervision. By contributing to the implementation of this regime, Saccos are in themselves supporting a safe, secure and stable industry."

It added that the levy was informed by the need by Sasra to be self-sustaining and fund its regulatory operations but all to ensure fairness as the deposit-taking Saccos are already paying a similar levy, albeit at a higher rate.

Starting to regulate the non-deposit-taking Saccos saw the workload for the regulator increase, putting more pressure on what it said were already scarce resources.

"The levy was informed by the government's directive on self-sustenance and financial sustainability of State agencies, where The National Government directed all state agencies, including SASRA, to fully fund their operations and activities through internally generated funds as prescribed in their respective laws," said Sasra.